Legislative Updates: August 2013

Capitol Call

The minority party in the House has many unofficial duties. One of them is to complain that the House should stay in session in August, a month that Congress has taken off for over 200 years. Every year in late July, without fail, the minority party, Democratic or Republican, will hold press conferences and declare to whomever will listen the vital need for Congress to be in session in August in order to solve all (or at least some) of our country’s problems. And every year the majority party ignores them and recesses early in the month, allowing members to flee DC and its oppressive humidity to head back to their districts and connect with “real Americans.”

The only difference this year was that one Republican, Rep. Scott Rigell (R-Virginia), joined his Democratic counterparts in declaring that the work of the Congress wasn’t done and that the House should not adjourn for August recess. Of course, he happens to hail from a state just across the river from the Capitol, but his point was that the House has a “deep responsibility” to pass Appropriations bills in order to fund the government. If the House and Senate do not pass similar versions of all 12 separate bills by September 30, a Continuing Resolution (CR) will have to be agreed upon in order to continue to fund the government.

In years past, the House would generally pass all 12 of its Appropriations bills by the Fourth of July and then would work with the Senate to get them to the President’s desk by September 30. However, so far the House has passed just 4 of the 12 Appropriations bills, which means that Congress will likely have to pass another CR in September while the House and Senate try to work out their differences on how much should be spent to fund the government.

When Congress comes back next month, they will also be facing: a debt ceiling that will be reached sometime this fall and will need to be extended; a nascent, highly controversial effort to overhaul our nation’s immigration system; a fledgling effort to overhaul the tax system; and an effort by some conservative Republicans to stop the implementation of Obamacare by defunding it. It’s little wonder why the House Republican leaders decided against the counsel of their Democratic counterparts and left town for five weeks.

In tax reform news, House Ways and Means Chairman Dave Camp (R-Michigan) showed his hand by saying that he wants to mark up his version of comprehensive tax reform sometime in October. His comments marked the first time he had publicly announced a specific date.

Over in the Senate, Majority Leader Harry Reid (D-Nevada) undercut the efforts of Finance Committee Chairman Max Baucus (D-Montana) by declaring that any tax reform bill considered by the full Senate must include “significant” revenue, and he for one would not help Baucus with the process. “I'm not going to be involved in this. I'm not on the committee. I'm not going to do it. I'm not even going to consider it,” Reid told reporters on July 25.

This happened to be the day before the deadline on which Baucus had asked his fellow Senators to submit letters saying which tax expenditures they thought should be added back in to the hypothetical “blank slate.” While the number has not been revealed, suffice it to say Baucus and cosponsor Senator Orrin Hatch have definitely not received 98 letters this summer.

Reid considers the $975 billion in additional revenue included in the Senate budget passed earlier this year to be a good starting point, and this amount of revenue appears at odds with positions Chairman Baucus has taken. It certainly is at odds with the views of Senate Republicans, who believe tax reform should be revenue-neutral, with revenues from tax code changes used to lower individual and corporate tax rates.

In regulatory news, two new Commissioners were approved by the Senate and will be joining the SEC next week. Kara Stein, longtime aide to Senate Banking Securities Subcommittee Chairman Senator Jack Reed (D-Rhode Island) and Mike Piwowar, former chief economist of the Senate Banking Committee Republican staff, will be replacing outgoing Commissioners Elisse Walter and Troy Paredes, respectively.

The Commodity Futures Trading Commission will also have a new Commissioner sometime soon, with the President nominating finance executive Christopher Giancarlo to replace former Republican Commissioner Jill Sommers, who left the Commission in July. The Senate is expected to consider Mr. Giancarlo’s nomination sometime this fall.

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This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice.

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (PDF). Copies of this document may be obtained from your broker or from any exchange on which options are traded or by contacting The Options Clearing Corporation, One North Wacker Dr., Suite 500 Chicago, IL 60606 (1-800-678-4667).